Blind man's bluff

The government's response to Britain's chronic housing shortage isn't so much bad as nonexistent. Falconer is just pretending nothing is wrong

Suddenly, housing shortages are making headlines. The Duke of Edinburgh, no less, launched a report published by the Joseph Rowntree Foundation warning that we face a shortage of 1.1 million homes by 2016, given current build and household formation rates. And as John Stewart, the House Builders Federation's admirable economic adviser, constantly points out, housing output is at its lowest peacetime level since 1924.

None of this would matter if we had a stable or declining household population. But, in fact, owing to immigration, greater longevity, increased divorce rates and an upsurge in births in the early 1980s, household formation between 1996 and 2001 has run at 10% more than the official projections that are used as part of the forward planning process.

As a result of years of undersupply, particularly in the economically buoyant parts of the country, we now have house price inflation way above general inflation and a government panicking about a shortage of housing for key public sector workers. So, presumably, we are on the brink of some serious policy changes and initiatives that will deal with this economically and socially damaging problem.

And pigs might fly.

The reality is that, as a result of 20 years of mythmaking by the Council for the Protection of Rural England and other anti-development interests, the issue of building more housing is politically unmanageable. This government has already run away from the issue twice.

The problem is that the greatest shortages are in the south of England and the government is afraid to give the Conservatives and Liberal Democrats a stick to beat them with. It is unwilling to use the powers that it has to force the regional assemblies and counties to come up with sensible, long-term housing figures, particularly because much of the extra housing would have to be built on green fields.

Presumably we are on the brink of some serious policy changes and initiatives from the government. And pigs might fly

In any event, to try to recover its position in such a way would be contrary to the whole thrust of PPG3 and the recent planning green paper, which gives ever greater discretion to local authorities and "communities" about how and what they plan. It is even rumoured that the DTLR will abandon the publication of national household projections and leave it to each region to produce its own. Now that's a novel way of magicking the problem away.

That the whole issue has ascended into cloud-cuckoo-land was illustrated in a feature about the shortage of affordable housing in Reading in The Times on 14 March. Apparently with a straight face, political leaders in the town said that it was not unusual for people to be unable to live where they worked and what was wrong with commuting to Reading from west London or Basingstoke? Well, for a start, what's wrong is that housing is already in short supply in both those places and councillors in Basingstoke have no more interest than those in Reading in allowing more to be built. And that's the problem – across the South-east, councillors have passed the buck so often that they no longer know where it is.

But, even if Lord Falconer woke up tomorrow morning seized by the scale of the problem and rushed round to see his old room-mate Tony at Number 10 to persuade him that this was a most pressing issue, their civil servants would gently remind them that it took 20 years of planned undersupply to get us into this mess and that it will take another 20 years to get out of it.

These Sir Humphreys know that no politician is going to embark on a difficult and fraught battle on many fronts when they will have retired or died before it produced tangible results. Currently the housing stock is growing 0.6% a year – getting that up to 1%, let alone the 2% of 1971, would require starting on a policy that, for the first 10 years, would merely add to housebuilders' profits, before eventually stabilising house prices around the year 2025. In other words, the same chronic underinvestment as suffered by the railways, roads and NHS, but it would not even be popular to start rectifying the housing shortage.

Nevertheless, given that it is beginning to make headlines, the DTLR is being pushed into action. However, since it does not believe the problem can be solved, all its attention is focused on the political fix of making developers provide more social housing. Sadly, since that only amounts to cutting up the same small cake in a different way, it actually makes the problem worse.